Renunciation and Relinquishment of United States Citizenship: Discussion thread (Ask your questions) Part Two
Ask your questions about Renunciation and Relinquishment of United States Citizenship and Certificates of Loss of Nationality.
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NB: This discussion is a continuation of an older discussion that became too large for our software to handle well. See Renunciation and Relinquishment of United States Citizenship: Discussion thread (Ask your questions) Part One
@Heidi
Then it’s like carrying your EHIC card. Helps the insurance company more than you maybe. But I took sick once in Switzerland and between EHIC and the travel insurance I had bought at the Post Office they paid 20,000 CHF, I paid nothing, not even for the limo to and from the airport. Fortunately I had curtailed my Swiss visit to 30 days, the original visit was to be longer. What I didn’t know then was that my policy was only good for a visit of up to 30 days. I have a longer limit now (policy with Amex). Going back to Switzerland for a week during half-term holiday.
After Brexit, if that ever happens, I might lose my EHIC. Not good. I was looking (out of interest) at Swiss sickness insurance premiums. With 2,500 deductible costs around CHF 250 a month. Not likely to move there though because although we have a place to live, the support for autistic children is not nearly so good as in the UK. Child is bilingual so if circumstances change we could move.
@gonesoon
Yes, I was paying about $130/ month medicare premiums and of course only works in the USA.
Unless you have EU citizenship after Brexit it could be a problem moving to CH. In fact even EU citizens have always had to show a close connection with CH like a residence, family member, job offer to get a residence
permit. The Swiss although not officially in the EU (they are in EFTA) had to agree to free movement to get their free trade deals.
@Heidi wrote: “Unless you have EU citizenship after Brexit it could be a problem moving to CH.”
Not true if by “you” you mean “me”: I have Swiss citizenship by ancestry and facilitated naturalisation. As does my child of course.
@GoneSoon
That was a Generic you, but you are fortunate.
The EU and by extension the Swiss offer healthcare reciprocity for retirees through the S1 cards. Any UK citizen retired and living in Switzerland can receive basically free healthcare if they are receiving an UK pension with a chf 300 yearly deductible, after that you pay 10% up to another chf 700, after that free for that year. Other EU countries have different rates for their deductibles depending on their Healthcare at home.
If you are a Swiss that arrangement does not apply if you can claim any Swiss benefits.
Not sure what will happen post Brexit, although the Swiss have just announced they have guaranteed rights for UK citizens now resident in CH. Not sure what will happen in the rest of the EU without a deal. I wonder if those 52% knew what they were at risk of losing?!
Okay.
I’m done with Form 8854.
Now moving on to the 1040 and 1040NR for year of renunciation.
From everything I have read, I must file
– Form 1040 with worldwide income for the period Jan 1 to day before renunciation. Write “Dual Status Statement” on top. Sign the form or not?
– Form 1040NR with US income only for the period Day of renunciation to Dec 31. Write “Dual Status Return” on top. Sign the form
– Form 8854.
For the 1040, I have salary from Canadian employer on line 1. I use form 2555 (pro-rated to portion of year applicable) and on line 6 it wipes out the salary. I also have some interest from a Canadian financial institution, which I report on line 2b. It is not offset by anything (long story). I end up owing $171 to the IRS. I could try to avoid paying this tax but it is not worth the trouble. I want to keep things very simple. Simplicity is worth a whole lot more than $171.
How do I “link” Form 1040 to the Form 1040NR?
1040 is just a “statement”, with line 22 “Amount you owe” of $171.
1040NR is a sea of zeros.
On line 42 of the 1040NR, the “Tax” line, do I check Box c, write “From 1040 dual status statement” in the space provided and write $171 ?
Filing form 8938 should be simple. Same as in previous years.
Filing FBAR should be simple. Same as in previous years.
Do not sign the Form 1040 because it’s a schedule not a return. If I recall properly, Form 2555 requires signing even though it’s a schedule not a return. The rules are the rules for the purpose of proving that no matter what you do you’re doing it wrong. Anyway, don’t sign the 1040.
I think the $171 that you owe has to be copied to the 1040NR in some manner. I guess I didn’t have that problem because the interest I received from a Japanese bank was taxed in Japan[*] and wiped out on Form 1116, but I don’t remember details. Your guess sounds like a good guess.
[* Japanese bank passbooks show interest credited twice a year. What they do not show is that the actual amount of interest was approximately[**] 125% of the amount shown and tax of approximately[**] 20% of that 125% was already deducted, leaving the amount shown. I discovered this by accident in 2008.]
[** It used to be exactly 125% and 20%, but the amount of tax is slightly larger now because of the earthquake.]
May I ask two questions about Form 8854, in particular Part V, Balance Sheet?
1. Apparently I am to deduce from your discussion that SS counts as a “pension” (listed as Items 6 and 7 on the form)? 2. How about whole-life-type life insurance? I don’t see it listed as such on the form, unless under Item 19 “Other assets”. Thanks for your thoughts.
I think it is not mandatory to agree with the IRS on evaluation of SS. Consider the US’s own SS. Courts have ruled that payments to SS are a tax and do not guarantee what amounts of future payments from SS might be. SS benefits will be whatever the US government decides they will be at the time. The age at which SS benefits start can be raised, and you get zero in some years when you thought you would get some. I think the same is true in a lot of countries. You don’t really know how much CPP might pay. They can renege at will. SS cannot be counted as an asset.
Sorry I haven’t even read any rules about whole-life life insurance, never having owned any.
@Seniorexpat
Your SS is not considered an asset and does not need to be listed.
You can read about ‘foreign’ life insurance policies on Hodgen
https://hodgen.com/foreign-life-insurance-and-americans-abroad/
Also from expat forum
https://www.expatforum.com/expats/expat-tax/1299050-form-8854-balance-sheet-life-insurance.html
Don’t mention the life insurance policy unless they already know about it. It isn’t worth anything to you unless you’re dead and even then it isn’t worth much to you.
A life insurance policy has a cash surrender value which you can obtain. If you feel you must you could include that but how to determine the cost basis. If you are comfortably under 2 million it won’t matter at all.
A quote from page 65 of the IRS 1040 Instructions:
“No checks of $100 million or more accepted. The IRS can’t accept a single check (including a cashier’s check) for amounts of $100,000,000 ($100 million) or more. If you are sending $100 million or more by check, you’ll need to spread the payment over 2 or more checks with each check made out for an amount less than $100 million. This limit doesn’t apply to other methods of payment (such as electronic payments). Please consider a method of payment other than check if the amount of the payment is over $100 million”.
Maybe the IRS has a sense of humor after all…
Sounds to me like a textbook example of structuring!
The US Treasury used to prevent itself (including the IRS and also the rest of itself) from accepting postal money orders larger than US$700. Later the limit was raised to US$1,000. To the best of my understanding, the reason was that the US Treasury suspected itself of money laundering. I don’t understand how structuring lessened its money laundering. Structuring only added to resentment by people who honestly thought they were supposed to pay amounts that they honestly thought they were supposed to pay.
“Sounds to me like a textbook example of structuring!”
He he he. Wait, shouldn’t laugh. Some other US agency just might charge someone for structuring for following IRS rules.
By the way Mr. T, if a foreigner[*] leaves Japan without reentry permission[**], their “My Number” number becomes invalid. Since a Japanese tax return now requires the submitter’s “My Number” number, this should make it impossible to pay taxes owing. My city hall said there’s a loophole and I think I’ve figured it out, since outbound immigration control at the airport might not let you out if you haven’t paid and if a resident of Japan hasn’t agreed to administer your taxes.
[* I wonder if the same thing happens to Japanese citizens. They don’t need reentry permission but if they’re becoming non-resident then the same thing ought to happen.]
[** Although permission to reenter within one year no longer requires advance approval from the immigration department stamped in your passport, it still requires marking a checkbox on the departure card[***].]
[*** I think smart foreigners mark that checkbox even when they don’t intend to return, so they’re beyond the reach of Japanese officials when reentry permission expires. I think this is why my city hall was so confused when I asked how to do things properly. Maybe this was the first time they had to figure it out.]
@ND
Laws, rules and regulations are seldom carefully thought out and if/when they are, the law of unintended consequences will usually reign supreme.
However, Although I am gainst tax increases and would like to like tax rates reduced, I am not against paying taxes to Japan, the country I live and work in, on income earned in Japan.
Unless changed recently, I do not need reentry permisdion as I have a permanent resident visa. So none of this would apply to me anyway.
“I am not against paying taxes to Japan, the country I live and work in, on income earned in Japan.”
Of course. That’s why I asked my city hall how to do things properly. Though I only had to ask them about city and state income taxes, since I already paid my national income tax in early January. (I had to explain to the banking department of a local post office how to let me pay, since I was the first one this year.)
I’m not sure how long a permanent resident can stay outside the country without reentry permission. However, the point about your “My Number” number becoming invalid DOES apply to permanent residents too, if they leave the country permanently.
Invalid, yes, inoperative no. I bet they retain it for their use. Might have to get a new one if moved away “permanently” and returned some time later but I doubt very much that all the documentation they have on us disappears once we leave.
@Heidi, Embee, Duchesse, UK Rose, Bird Person,Plaxy, Medea Fleecestelaer, Nonoymous, Portland, Jane, Nononymous, Portland. The day is finaly here ” Renunciaiton Day” and want to thank you all and everyone on the Issac brock web site for helping me get to this stage and your hellp, support and invaluable information and support and I would not be at this point without you and this web site. I have had 2 sleepless nights still wondering if I am doing the right thing (at one point almost getting up in the middle of the night to turn on the computer and cancel!) but I hope I am going forwward and to be free of the tentacles and constant worry of all this. Your words of support meant a huge amnount and drove me forward in what is a very big emotional roller coaster of a ride. I am almost there and jsut hope i do not regret this later in life. I will let you know how i get on. Think of me standing there!
“I have had 2 sleepless nights still wondering if I am doing the right thing”
I had sleepless nights feeling I wasn’t doing the right thing but was doing the necessary thing. A few days later it changed to a feeling of relief that I really had done the right thing, almost escaping from the Mafia.
Good luck Kabby. It’ll seem strange I’m sure when the deed is done, but we’re here for you always.
All the best, Kabby. Well done for getting to the finish line! 🙂
I have had one sleepless summer trying to figure out how to get free of this. Get it done and count your blessings.
Although I shed some tears when my CLN arrived, as the months have gone on I have felt more and more settled in my decision.
Wish I could follow the same path.